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Just Give Up

It might be the smartest thing you do.

If you'd seen me doing my laundry over the past few weeks, you'd have seen me emptying a bucket that keeps filling with water by my washing machine, and you'd have seen me carefully stepping around streams of water that are meandering and pooling all over my basement floor, and you'd sometimes even have seen me using my Shop-Vac to vacuum up some of that water. It's not a pretty sight, and despite my attempts to clear out a seemingly clogged drain, I haven't solved my problem.

Sometimes it's best to call in a professional.

There's a good reason why we don't do our own dentistry, and why many of us don't fix our own cars. There's just no way that we can be sufficiently informed about and skilled in every area that occasionally needs our attention. Heck, we're not even interested in many of these areas. Investing, for plenty of us, is one of those areas.

Why you might give upDo you enjoy studying lots of companies and digging deep into their financial statements? Are you good at it? Do you like following their progress and thinking about which ones will prosper and which will end up in corporate graveyards? Do you even have the time to devote to it, or would you rather spend that time playing with your children, or shopping, or golfing, or working, or even just crossing lawn-mowing off of your to-do list?

Many of us just don't have the time, interest, or skills to invest successfully. This doesn't mean I don't believe that most of us could be quite good at it if we decided to focus on it. Many of us just keep losing money in stocks. Here, check out these companies -- which were (or are) rated four or five stars in our CAPS investing community. They're down considerably over the past year because many people have sold them -- yet, to many others, they hold great promise. Odds are, you're looking at a world of mistakes: investors selling what they should hold, and buying what they shouldn't, often only to sell too soon:

Company

CAPS Stars (out of five)

52-Week Return

Apple(NASDAQ:AAPL)

* * *

(23%)

Chevron(NYSE:CVX)

* * * *

(28%)

Petroleo Brasileiro(NYSE:PBR)

* * * * *

(35%)

UnitedHealth(NYSE:UNH)

* * * * *

(21%)

Suncor Energy(NYSE:SU)

* * * * *

(45%)

General Dynamics

* * * *

(30%)

Fluor

* * * * *

(39%)

Data: CAPS.Fool.com.

I myself have made some brilliant investments and also some boneheaded ones. Every time I lose a few thousand dollars on a misguided investment, I remember a compelling alternative thing I could have done with that money: I could have invested it in a good mutual fund and let some skilled pros manage that money for me. In fact, that is what I'm doing with an increasingly larger chunk of my money.

What to doYou don't have to move all your money into funds, but consider this: Good fund managers are smart, and principled, and experienced in investing. They (and their helpers -- how many helpers do you have?) are paid to spend all day studying stocks. They may do a better job of managing your money than you can -- especially in volatile markets. They may let you sleep better at night.

Consider, for example, the Ivy Asset Strategy C (WASCX) fund, invested in bonds as well as stocks such as Chevron, Philip Morris(NYSE:PM), and Gilead Sciences(NASDAQ:GILD). Check out how it has outperformed the S&P 500 in average annualized returns:

Ivy Asset Strategy

S&P 500 Index fund

Over 3 years

6.2%

(7.1%)

Over 5 years

13.3%

(1.7)

Over 10 years

9.9%

(1.8%)

Data: Morningstar.

The downside here is that most managed mutual funds don't beat the market, so you do have to select your funds carefully. You also want to avoid sales loads, if you can, and find managers who have been at the helm for more than a year or two and whose philosophies and approaches you respect. In addition, look for low fees, and, ideally, low turnover. The Ivy Asset fund, for example, charges a rather hefty 1.8% annual expense fee, while many solid funds charge 1% or less.

So, proceed diligently and vigilantly -- or let us help you by doing much of the legwork for you. (Again -- seek help, when you can't, or won't, do a great job on your own.) I invite you to check out our Motley Fool Champion Funds newsletter, which is where I've gotten some good leads, myself. Try it for free and see which funds have been recommended -- and why. Together, our picks have been beating their benchmark indexes by some six percentage points. Stock funds, balanced funds, small-cap funds, foreign funds, bond funds, value funds, funds for your 401(k) ... you name it, and we've got some for you, whether you're an aggressive or conservative investor, or somewhere in between.

Author

Selena Maranjian has been writing for the Fool since 1996 and covers basic investing and personal finance topics. She also prepares the Fool's syndicated newspaper column and has written or co-written a number of Fool books. For more financial and non-financial fare (as well as silly things), follow her on Twitter... Follow @SelenaMaranjian